new report released today from Centre for London and Trust for London, Settle for Nothing Less, reveals systemic failures in the way national minimum wage (NMW) compliance is enforced and sets out a bold agenda for reform. It shows that:

  • Over 300,000 people in the UK earn less than the legal minimum wage
  • Only nine employers have ever been prosecuted for paying below it
  • Only one employer has ever been named and shamed
  • Weak deterrents and excessive centralisation make NMW enforcement ineffectual

There are particular problems in London with:

  • 10% of all calls to the national Pay and Work Rights Helpline coming from Londoners
  • 10% of the arrears owed for underpaid work nationally are due to short-changed workers in London – more than any other region of the UK
  • In 8 of London’s boroughs – Waltham Forest, Haringey, Hackney, Ealing, Sutton, Lewisham, Newham and Bexley – at least 5% of workers earn at or below the legal minimum, leaving one in twenty workers at risk of exploitation.
  • But there has only ever been one prosecution of an employer for paying below the national minimum wage in London and there has never been a company named and shamed in the capital for breaching minimum wage law

The new research paper, authored by Andy Hull, recommends a number of reforms, including:

Local Authorities should be granted greater powers to tackle minimum wage non-compliance
NMW enforcement should be partially devolved to Local Authority level. Such local enforcement should sit alongside and complement central functions that should be retained and reshaped.

Removing the limit on fines levied against employers paying below the NMW
The current cap of £5,000 is too low and should be removed altogether. There is also a need for high-profile ‘naming and shaming’ and a more rigorous pursuit of repeat offenders for prosecution.

Banning the advertising of unpaid internships
Advertising of unpaid internships needs to be made illegal. This need not impact on the advertising of unpaid voluntary roles. Unlike voluntary roles, internships involve all the demands and responsibilities of work, including working set hours.

Insisting on NMW payment for home carers’ travel time
Payment of the NMW to domiciliary care workers for their at-work travel time needs to be a requirement of any care work contract issued by a Local Authority.

This report is the second in a series on low pay. The first report, authored by former Treasury Minister Kitty Usher, argues that a London weighting should be added to the minimum wage. Kitty shows that a minimum wage of £6.75 per hour could be paid in the capital without effecting jobs or competitiveness.